Medrice Coluccio, chief executive of Providence Health & Services, Southwest Washington, testifies during the Washington State Department of Health's May 4th public meeting at the Lacey Timberland Library on the mental health hospital proposed by US HealthVest. Steve Bloomsbloom@theolympian.com

Medrice Coluccio, chief executive of Providence Health & Services, Southwest Washington, testifies during the Washington State Department of Health's May 4th public meeting at the Lacey Timberland Library on the mental health hospital proposed by US HealthVest. Steve Bloomsbloom@theolympian.com

Competing mental health hospital proposals roll on in Thurston County

A public hearing is scheduled Wednesday on Olympia Behavioral Health, the second of two mental health hospitals proposed for Thurston County this year.

The 85-bed hospital, which is expected to cost $34 million and open in early 2018, is a joint proposal of Providence St. Peter Hospital and Fairfax Behavioral Health, one of the largest providers of inpatient psychiatric services in the state.

Wednesday’s hearing at the state Department of Health in Tumwater follows a certificate of need application that Providence and Fairfax submitted to the state in June.

The application, which is required by the state when a medical provider proposes a new service, remains under review. It outlines the Olympia Behavioral Health proposal in detail, including the need for such services.

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“We estimate there are current shortages of 49 inpatient psychiatric beds this year and forecast shortages of 65 beds in 2031,” the application reads. Providence and Fairfax also acknowledge that those figures are conservative estimates that do not include “any impact from net in-migration into Thurston County.”

Fairfax Chief Executive Ron Escarda, who has worked in the mental health profession for 26 years, said that chronic underfunding of mental health needs over the past 10-15 years, combined with population growth, have created tremendous demand for behavioral health services.

“Capacity has not kept pace,” he said.

But Providence and Fairfax are not alone in wanting to open a mental health hospital here, or alone in identifying the need for such services in the county and region.

In fact, they were beaten to the punch by New York-based US HealthVest, which submitted a certificate of need application earlier this year. The HealthVest proposal — an $18 million, 75-bed mental health hospital called South Sound Behavioral Hospital — already has had its public hearing and the certificate of need was approved by the state.

But not without a fight. Providence and Fairfax have appealed the state’s ruling on the HealthVest proposal, which will now come before a health law judge Dec. 7, said Janis Sigman, manager of the state’s Certificate of Need program.

US HealthVest also operates mental health hospitals in the Chicago area and in Georgia, and it has one under construction in Marysville, according to its website.

Providence Health & Services of Renton, the parent organization of St. Peter Hospital, has established relationships with Fairfax in Everett and is working toward a new mental health operation in Spokane.

US HEALTHVEST DEFENDS PROPOSAL

Despite the appeal, US HealthVest has defended its proposal. Richard Kresch, president and chief executive of US HealthVest, could not be reached for comment this week, but rebuttal comments have been sent to the state and shared with The Olympian.

US HealthVest officials said the following:

“Providence St. Peter Hospital reports being ‘deeply concerned’ about US HealthVest being awarded a certificate of need. The irony is that Providence had literally decades to step forward and address the community need. They chose not to develop the programs and services needed by the community until the US HealthVest proposal was put forth and placed under formal review. Their effort now is too little, too late, and their concern is both misplaced and in some instances disingenuous.”

Providence had other concerns, said Certificate of Need manager Sigman. In the appeal, they said HealthVest’s “admission and charity care policies were not detailed enough, or good enough; the company couldn’t demonstrate the hospital would be financially viable; and that they lack experience in operating psychiatric hospitals.”

Medrice Coluccio, regional chief executive of Providence Health & Services, Southwest Washington, made the case for the Providence/Fairfax proposal in an interview Thursday.

She cited the long history of both organizations and how they have been aligned to serve the poor, the vulnerable and those with psychiatric needs.

“We are already grounded and continue to hit the ground running in furthering our service to those who suffer from behavioral health issues,” she said. “We are a known entity.”

BOTH PROPOSALS PREFER LACEY

Preferred sites for both hospital proposals are in Lacey. US HealthVest would like to move into an existing building at 605 Woodland Square Loop SE, not far from Huntamer Park, while Providence/Fairfax has identified undeveloped land at 3000 Marvin Road NE.

Under a city of Lacey ordinance that regulates “essential public facilities,” both proposals had to identify alternative sites in addition to the preferred site. The second HealthVest site is at 2800 Marvin Road NE, while the second site for Providence is at 2621 Hogum Bay Road NE.

As part of the development process in Lacey, both hospitals will have to submit conditional use permits to the city and come before the hearings examiner, said Rick Walk, community development director. That has yet to happen for either proposal, he said.

City officials also have yet to form a recommendation about either proposal and won’t until they get a better understanding of the land-use plans, Walk said.

Lacey Police Chief Dusty Pierpoint, however, shared some concerns about US HealthVest during a public hearing on the South Sound Behavioral Hospital in May.

US HealthVest operates a mental health hospital near Chicago. Pierpoint called the local police department in the area to get an opinion about the company’s operation and said it did not receive glowing reviews. He also said he wants more information about how patients would be discharged.

Does US HealthVest still have an interest in 605 Woodland Square Loop SE? It’s not clear. MJR Development of Kirkland is the landlord for that building, and in September partner Mark Lahaie said they were working to lease the building to a state agency. MJR could not be reached for this story.

Certificate of Need manager Sigman said if US HealthVest has altered its preferred site, they would need to amend the certificate of need and undergo another public review process. So far the state has not been notified of any change, she said.

Meanwhile, Olympia Behavioral Health is envisioned as a 60,000-square-foot building that would occupy eight of 22 acres at the Marvin Road address. Staff size could range from 175 to 250, Fairfax Chief Executive Escarda said.

BOTH PROPOSALS COULD BE APPROVED

US HealthVest has its certificate of need in hand, and the Providence/Fairfax proposal could be approved as well — if the state determines it meets all of the criteria, Sigman said.

“Theoretically it could happen,” she said.

Olympia Behavioral Health is ready to move forward, Coluccio said.

“Our focus is to continue to partner with Fairfax and bring the hospital to reality,” she said. “We are marching straight ahead, and we will be expedient in so doing because the needs keep growing.”

Providence’s public hearing is set for 9 a.m. Wednesday in Room 153 at the Department of Health Point Plaza East building, 310 Israel Road SE, Tumwater.